Elbit Imaging: What Actually Reaches the Company from Kiryat Bialik After the Partner, the Bank, and the Bonds?

Kiryat Bialik Is the Cleanest Case of the Value Gap

The main article argued that Elbit Imaging's value is still trapped between financing, permits, and partners. Kiryat Bialik is the cleanest place to test that claim, because almost every layer is visible in one project: real sales, an explicit gross-profit estimate, an explicit surplus estimate, a partner loan, bank financing, and then a partner bond issue secured by the full project surplus.

On the surface, this looks like a healthy project. It includes 354 units, Elbit's effective share is 50%, and contracts had been signed for 173 units by year-end 2025. The full-project estimate stands at NIS 685 million of expected revenue and NIS 94 million of expected gross profit. Those are the numbers that make the headline. They are not the numbers that answer the shareholder question.

That answer starts elsewhere. In the annual report's project page, the bridge from gross profit to pullable surplus shows that the full project's expected surplus available for draw is only NIS 46 million, and Elbit's share of that amount is NIS 23 million. Even that figure is not presented as near-term cash. It is shown as surplus expected to be drawn only in 2028-2029 and only subject to the lending bank's consent. At the same time, Elbit still recorded a roughly NIS 0.9 million share of loss from Kiryat Bialik in 2025. In other words, the project is moving, but it is not yet flowing through to a clean profit contribution at the company level.

From Gross Profit to Surplus That Can Actually Be Drawn

This is the key bridge. Kiryat Bialik is not short on activity. It is short on clean conversion from project economics to company-level cash. The annual report lays that out almost mechanically: NIS 94 million of expected gross profit at the 100% project level, against a NIS 48 million gap between accounting gross profit and expected economic profit, mainly because financing, marketing, and selling costs sit outside cost of sales. The result is NIS 46 million of expected drawdown surplus at the project level, and only NIS 23 million at Elbit's share.

That number matters more than any other slide-level headline because it gets much closer to the real question: what could actually move up from the project. It also shows why it is wrong to read Kiryat Bialik through NIS 94 million of full-project gross profit, or even through the NIS 43 million of expected gross profit at Elbit's share that appears in the January 2026 presentation. In that same presentation, both the project page and the summary page show expected surplus at Elbit's share of just NIS 18 million.

That gap is not cosmetic. It shows that management itself is separating project value from cash that is plausibly capable of reaching the company. So even before bringing in the bank and the partner, Kiryat Bialik no longer reads like a NIS 43 million project for Elbit shareholders. Based on the company's own materials, it reads more like an NIS 18-23 million case, depending on which document and date you use.

The Partner Is Not Just Sharing the Project, It Is Funding the Equity

Anyone reading Kiryat Bialik as a simple 50/50 partnership is missing the real mechanics. In the annual report's investee note, the partner had been providing a shareholder loan to the project company since June 2022, at a contractual stepped rate ranging from 5% to 12%. By year-end 2025, that loan's principal stood at roughly NIS 77.5 million. On November 26, 2025, the agreement was amended so that the loan would carry a fixed 8% annual rate instead of a ladder that was supposed to climb as high as 12%.

That cuts both ways. On one hand, it eases the burden relative to the prior schedule. On the other hand, it makes clear that the first layer after the bank is not clean equity. It is partner financing that carries interest. The note goes one step further: if the project company needs additional equity for the project, the partner will provide that amount too, as another loan carrying a fixed 8% annual rate.

The January 2026 presentation makes the same point in a shorter and clearer way. Next to the NIS 18 million expected-surplus figure, a footnote says that all of the equity for this project was invested by the partner. That is not a footnote you can ignore. It is management's own way of saying that Kiryat Bialik may have value, but the capital stack beneath that value is not sitting with Elbit Imaging.

So when the question is what actually remains for Elbit from this project, ownership percentage is not enough. Ownership tells you who holds the rights. It does not tell you who funded the path to those rights, at what rate, and in what order of priority.

The Bank and the Bonds Keep the Surplus Conditional

Even without the partner, the cash is not free. At year-end 2025, project debt to the bank stood at roughly NIS 207.1 million. The credit facility stood at NIS 181 million, plus NIS 230 million of Law of Sale guarantees. Surplus release depends on the pace of sales and the pace of construction, and in any case requires the lending bank to release funds only after all project obligations to it have been repaid.

The March 12, 2026 immediate report shows that the bank has not become less central. The amended facility splits the project into three stages, lifts the cash-credit ceiling to as much as NIS 260.8 million, and expands the guarantee framework over time to NIS 616.5 million and then NIS 633 million, but not without conditions. Stage B still requires presales of NIS 277.8 million by March 31, 2026, and stage A2 still requires a final building permit by April 30, 2026, subject to possible extensions.

Then comes the bond layer. On January 13, 2026, Elbit reported that the partner had completed a bond raise of roughly NIS 120 million, secured by a pledge over 100% of the project's surplus. Elbit also said that because of that, it would not expand its own existing bond series for this project. The annual report adds an important protection clause: if surplus that should have reached Elbit Megoorim does not reach it because of the pledge, the partner is obligated to transfer those amounts to Elbit Megoorim. That matters, but it does not turn the surplus into free cash. It only shows that Elbit tried to preserve its contractual claim even after the partner financed itself against the project.

So the right order for reading Kiryat Bialik is this: first the bank, then a project that advances in stages and only against presales and permits, then partner financing at 8%, then a partner bond raise secured by the full project surplus. Only after that can you start talking about what remains for the company.

So What Actually Reaches the Company

The hard-edged answer, based on the local files alone, is not NIS 94 million and not NIS 43 million. Those are gross-profit figures, either at the project level or at Elbit's share. Even 173 units sold by year-end 2025 is not an answer to the cash question. The figures that come closest to answering it are NIS 23 million in the annual report and NIS 18 million in the January 2026 presentation, both at the level of expected surplus attributable to Elbit's share.

Even those two figures are still not free cash. In the annual report, they are deferred to 2028-2029 and conditioned on the bank's consent. In the presentation, they sit next to a note saying the partner funded all project equity. And between those two documents sits a NIS 120 million partner bond issue secured by the full project surplus, alongside a bank facility that still depends on presales and permits.

What the local files do not provide is a full downstream bridge from Elbit Megoorim to Elbit Imaging common shareholders after all parent-level debt and overhead. So it would be wrong to pretend there is a cleaner net number hiding here. But it is possible to say with confidence what the files do not support: they do not support reading Kiryat Bialik as if the project's NIS 94 million expected gross profit, or even the NIS 43 million company-share gross profit, is the amount that can realistically move up to Elbit Imaging.

Kiryat Bialik remains an important project. It is selling, it is moving, and it does carry positive project economics. But for Elbit Imaging shareholders, based on the local evidence set here, it still looks much more like a conditional surplus option than a clean cash source. That is exactly what the main article argued at the company level, and in Kiryat Bialik the mechanics are visible almost all the way down to the last number.